In those parishes, Citizens policies need not cost 10 percent more than private market policies

Baton Rouge -- A bill that will reinstate an expired 10 percent break on rates charged by the Louisiana Citizens Property Insurance Corp. on policies written in 12 coastal parishes has been signed into law by Gov. Bobby Jindal. Legislative records show Jindal signed Senate Bill 204 by Sen. Dan "Blade" Morrish, R-Jennings, on June 7. It will go into effect Aug. 1.

Sen. Dan 'Blade' Morrish, R-Jennings

State law now requires that Citizens policies be 10 percent higher than the private market policies in an area based on either actuarially justified rates or the highest rates charged among insurers that have at least 2 percent of the market in an area.

The bill started out as a routine measure to exempt Citizens from having to post a bond in court proceedings. Many state departments or state-created agencies are now exempt from the requirement to post bond in a court matters, and the bill would expand that to include Citizens.

Because Morrish's bill was one of the last left in the final days of the session to address Citizens-related matters, the measure was amended to give policyholders who have been hit with double- and triple-digit increases -- especially in wind and hail coverage -- some relief.

The 12 parishes were exempt from the 10 percent requirement, some for all of the five years that followed Hurricanes Katrina and Rita and others for part of that time. The 10 percent was added back on the premium notices in the dozen parishes in 2011.

The new rates for Citizens went into effect for new and renewing policies on June 1. Before the bill was a signed, Donelon said weeks ago that if it becomes law, a rebate program may have to be set up for the policyholders in the 12 parishes who have already paid their premiums.

"If we owe it, we will pay it," Donelon said. "We will figure it out and find an equitable way" to deal with those policyholders.

Donelon said he did not oppose the bill nor did he ask Jindal to veto it.

"We have been able to live with that (10 percent waiver) in the coastal area" in the past, Donelon said.

The Citizens board earlier this year approved an overall average rate increase for policyholders of 10.5 percent. Policyholders who carry just wind-and-hail coverage saw an average rate increase of 58 percent. Some coastal parishes were hit with rate increases of 100 to 200 percent.

Citizens officials said the wind-and-hail-only product has been underpriced for years and not many other insurers are writing those policies.

Meanwhile, Donelon has asked Attorney General Buddy Caldwell's office for a legal opinion on the methods Citizens used to set the wind-and-hail rates and his approval of them.

The request was made June 7. There was no indication on when the legal opinion would be issued.